Advantages and Disadvantages of Credit Cards

In order to decide whether it is worth getting a credit card one needs to take into consideration its defining features. In other words, one needs to answer the question referring to the advantages and disadvantages of credit cards. In order to help people’s choices, one can read the principal issues below both about the positive and the negative points.
First of all, let’s see the advantages! The practical thing about credit cards is that they not only offer the convenience of carrying one’s money through a simple card, but they also provide free credit for the short term. However, one needs to be aware of the fact that this option is free only in case one repays the balance totally by a predetermined period. This period can be up to 59 days from the transaction date, and it can be checked from the credit card statement.
Second, with a credit card one can make purchases and pay for services conveniently, and what seems to be even more important, this can be done safely. In case some inconveniences occur (theft for instance), one can close the stolen card at that very moment, and thus stop the thief from making any transactions by card. Another advantage of credit cards is the option of using it at an international level, such as for making purchases from abroad or making online purchases. This removes the inconveniences of having to exchange money and think about the different rates. In one word, a credit card may be seen as a global currency that facilitates international transactions and provides a great help for those who travel abroad frequently.
Talking about safety one needs to be aware of the purchase-protection available for credit cards. According to the act referring to this protection, card issuers together with retailers take responsibility for the mistakes and faults related to purchases. To put it into the simplest words, if one makes purchases of $100 to $3,000, pays with a credit card, and it comes to the light that the product or service is faulty or is not received due to the company going bankrupt, the person will get a refund from the issuer of the card. There is a legal protection against fraud as well, which means if another person (a thief) uses one’s card, one cannot be forced to pay for the losses or purchases made by an unauthorized person.
Similarly, credit cards offer the option of internet banking and trading. This is a unique opportunity of checking the balance of the card, one’s debt, as well as getting a detailed statement of all the transactions made during a certain period. Moreover, there is the option of exchanging money, managing one’s travelers’ cheque and trading with stocks, bonds or other products of the financial market.
Finally, credit card issuers use attractive incentives for those who use a card continuously. Among these incentives the most prominent is the loyalty bonus, the cash-back reward as well as payments supporting different charities.
Talking about the disadvantages, one needs to observe the fact that a considerable amount may be charged due to the occurring interest rates. How this is possible? As long as one manages to pay back the borrowed balance in full by the date prescribed in the statement, there is no interest-rate charged. However, by not managing to repay the total amount by the deadline, one will need to pay interest-rate based on the amount of the owed debt.
Another important issue that needs to be taken into consideration is the fact that the applying interest-rates vary considerably from institution to institution. Therefore, in order not to pay high charges, one needs to find a company that offers competitive (that is to say, low) interest-rates and long balance-repayment periods. In order to find such a company, it is very useful to use an online review that compares several credit card types and clearly presents the advantages and disadvantages of each. In such a review one will find the applying interest rates, the loyalty bonus and cash back system, as well as late-payment or other fees that may apply.
Last but not least, a card owner may realize that he/she cannot borrow the whole amount he/she intended to get. The reason is simple: the amount one may spend from a credit card is limited, thus one may be restricted from getting as much money as one demanded. For instance, if one has never had a credit before, he/she may be limited to get a credit between $300 and $500. Nevertheless, the possibilities are more promising for those with a good credit rating. Due to the credit crunch, however, credit providers are becoming more and more careful about the borrower’s credit history and the lendable amount. Although these restrictive features, credit cards still remain a convenient and safe option of making payments and borrowing money.